How a Prepaid Contractor Licence protects homeowners

Submitted by Blue Jay Exterior Renovations

(Edmonton) – Is your siding contractor licensed to operate as a prepaid contractor by the Government of Alberta? You can probably count in single digits the number of siding contractors that have bothered to maintain this license, but in most cases, it’s absolutely required.

In Alberta, contractors must be properly licensed to accept any deposits before work is completed. And no, a municipal business license isn’t the same thing.

What is a Prepaid Contractor?

According to Service Alberta, “contractors who accept money before work is complete and discuss or finalize a contract away from their normal place of business” are considered prepaid contractors under Alberta’s Consumer Protection Act.

This means that if a contractor presents, picks up, or even talks about a contract in your home, they need to be licensed as a prepaid contractor. Also, if a contractor is requiring you to pay for work in advance (even a partial deposit for materials) they need to be licensed as a prepaid contractor.

If a contractor is operating a prepaid contracting business but doesn’t have the correct license, they are breaking the law.

What is the point of a Prepaid Contractor License?

Consumers are particularly vulnerable to contractors that take deposits, and putting these companies through a few extra steps of verification is key to protect Albertans. So, how does the prepaid contractor license actually protect consumers?

Licensed prepaid contractors are bonded by the Government of Alberta. If the contractor fails to perform the scope of work outlined in a customer’s contract, the bond is revoked. The bond can be used to compensate customers who have been left high and dry, and serves as a stiff penalty to the contractor.

All directors of the company are subject to a background check. If an owner or other high-ranking person at the company has a checkered past, the license won’t be granted. This means that a company with a valid prepaid contractor license definitely doesn’t have a convicted fraudster running the business!

Our contract must follow specific rules laid out by Service Alberta. This includes a buyer’s right to cancel clause, a defined scope of work, and a clear payment schedule. A representative of the government had to actually read our contract template and approve it to make sure it was correct.

How to tell if a company has a Prepaid Contractor License

Luckily, it’s really easy to check if a company has the license. Visit Type in the company’s name and select “prepaid contractor” from the dropdown menu. If the company you are searching has the prepaid license, you’ll see their listing, including the business type and their location.

If the company you are searching doesn’t have the license, your search won’t return any records.

As you can imagine, most of the “horror stories” that involve a contractor taking a deposit and then turning into a ghost are with companies that are not licensed as prepaid contractors. That’s the whole reason that the prepaid contractor license in Alberta exists: to protect consumers from contractor fraud. Take advantage of this program by making sure you hire a contractor with the right license.

For more helpful renovation tips, exterior design ideas, and a contractor selection checklist, request your free Siding Idea and Inspiration guide at The guide is a FREE 36-page glossy magazine available to anyone in the Edmonton area.

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